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2014 (8) TMI 861 - HC - VAT and Sales TaxComputation of Deferred tax - Denial of input tax credit - payment of half of deferred tax upfront - HVAT - Whether the tax deferred would be calculated as the amount of tax payable on the taxable turnover of the goods manufactured by the unit without deducting the input tax paid by the unit on the goods used in the manufacture of the goods or after deducting the input tax - Held that:- what is required to be paid by a unit opting for payment of 50% of deferred tax, is the payment of half of the amount of the deferred tax upfront.The provision nowhere provides that deferred tax would be calculated after computation of tax payable is determined according to the returns. It only provides that if half of the deferred tax is paid, then it would be assumed that the tax due according to returns is deemed to have been paid in full. Thus what is required to be paid, is 50% of the deferred tax which would be computed on the basis of tax on sale of the goods manufactured by the industrial unit and the benefit of the payment of tax on the purchase of the goods used in manufacture i.e. input tax shall be allowed as the tax paid in advance. In other words, the amount of tax payable according to the returns is the amount of tax calculated on the sales of the goods manufactured minus the input tax credit. - Decided in favor of assessee. Binding force of Circular / Clarification issued by the department - Held that:- circulars, instructions and clarifications issued by the competent authority granting administrative relief in exercise of power conferred under statutory provision are binding on subordinate officers. It is not open to the subordinate officers to contend that the circulars, instructions and clarifications are erroneous and not binding on them as long as they remain in force. However, they would not be binding on the courts and the assessees. - it will be open for the assessees to plead that the circular, instructions and clarification issued by an authority which is not of beneficient nature to them runs counter to the statutory provision and is ultra vires and bad in law and thus, ineffective qua their rights. - Decided in favor of assessee. On the basis of clarification dated 12.7.2004 issued under Section 56(3) of the HVAT Act which is binding on the authorities for the administration of tax, the state cannot deny the benefit of input tax credit to the dealer for determining the tax payable by it. Thus, viewed from any angle, the dealer is entitled to the benefit of input tax credit while calculating the 50% deferred tax upfront to be paid by it. - the eligibility criteria is to be construed strictly but a liberal approach may be adopted in construing other conditions. - Similar was the position in Creative Handicrafts and M/s Mahabir Vegetable Oils Pvt. Limited's cases (2011 (2) TMI 7 - Supreme Court) - Decided in favor of assessee.
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